The long term goal is to understand the regulation of the formation of pulmonary alveoli so this information may be used for therapeutic purposes. In the absence of pharmacological means of inducing alveolus formation in humans, lung transplantation remains the only remediation for diseases in which there is a developmental deficit of alveolus formation, e.g. bronchopulmonary dysplasia or a deficit of alveoli due to their destruction, e.g. emphysema. To insure and facilitate a molecular induction of alveolus formation, beyond that already achieved in rodents by treatment with all-trans retinoic acid (RA), a fundamental understanding of the mechanism(s) of the spontaneous and RA-induced formation of alveoli, and the extent and functional effect of RA treatment on alveolar-deficient lungs, are required. This proposal is based on work showing RA 1) induces the formation of alveoli in newborn rats and prevents the inhibition of alveolus formation by a corticosteroid hormone, 2) increases alveolus formation in postweaning rats, 3) partially abrogates the prior glucocorticosteroid inhibition of alveolus formation in postweaning rats, 4) initiates septation in adult tight-skin mice in which there is failed spontaneous septation, and 5) abrogates key features of human and experimental emphysema in adult rats previously made emphysematous by the instillation of elastase. This proposal is also based on the work of many others that has led to the notion that lipid interstitial cells, lung storage sites for vitamin A, serve as organizing centers to signal the onset, cessation, and metabolically regulated spacing of alveolus formation by the release of retinoids, to which other cells respond with appropriate changes in gene expression. Therefore the specific aims, for work on rats and mice, focus on a) the explication of the retinoid receptors involved in regulating alveolus formation, b) an assessment of the response of the anatomical components of the O2 diffusion pathway to RA treatment of rats and mice that have experimental or spontaneous failed septation, and c) the regulation of release of retinoids by cultured lipid interstitial cells and the effect of these cells on co-cultured pulmonary microvascular cells. The proposed work will 1) provide important biological and clinical information by further explicating the retinoid receptors involved in the induction and cessation of alveolus formation, 2) further elucidate the conditions and the extent to which retinoids might be useful clinically, and 3) further advance the new paradigm of the induction of alveolus formation for therapeutic purposes.